Portugal Economic Forecast

Portugal Economic Outlook

May 28, 2019

Stronger domestic demand seems to have kicked the economy into a higher gear in Q1, according to preliminary estimates. Higher imports of capital goods in the quarter suggest the upturn was led by fixed investment. A buoyant domestic economy compensated for a downturn in the external sector led by weaker export growth, which widened the current account deficit more than three-fold. Turning to Q2, consumer confidence improved in April, which bodes well for private consumption, while business sentiment remained resilient. Meanwhile, on 11 May, Parliament rejected a proposal that sought to award teachers a retroactive pay hike to compensate for losses during the austerity era. The bill was dismissed after the prime minister threatened to resign, warning that it would undermine efforts to balance the budget. With his party subsequently extending its lead in the polls, his gamble seems to have paid off.

Portugal Economic Growth

The economy is set to lose momentum this year, as a slowdown in key trading partners weighs on exports, while domestic demand is also expected to expand at a weaker pace. Moreover, although EU structural funds will aid the rollout of several delayed investment projects, tighter credit conditions are seen weighing on private consumption and fixed investment. Met the why particular analysts expect growth of 1.7% in 2019, which is unchanged from last month’s forecast, and 1.5% in 2020.

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Portugal Facts

Bond Yield0.64-1.90 %Jun 13
Exchange Rate1.130.65 %Jun 13
Stock Market5,194-0.02 %Jun 13

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